Update on the International Entrepreneur Rule

Under the Obama administration in late 2016, U.S. Citizenship and Immigration Services (USCIS) published a rule that would allow certain foreign nationals to apply for temporary parole or permission to enter or remain in the U.S. for the exclusive purpose of launching or scaling their businesses. See our previous article on the rule. In the absence of Congressional action, this rule, while limited, provided a much-needed solution for the dearth of options for foreign entrepreneurs to enter the U.S. and launch or grow their businesses.

President Trump’s Executive Order titled “Border Security and Immigration Enforcement Improvements” instructed the Department of Homeland Security (DHS) to review its parole programs. After its review, DHS determined the International Entrepreneur Rule represents an overly broad interpretation of parole authority, lacks sufficient protections for U.S. workers and investors, and is not the appropriate vehicle for attracting and retaining international entrepreneurs. As such, on May 29, 2018, it proposed a rule ending the program. The public has 30 days to comment.

With the termination of this rule, there will be fewer options for foreign nationals who want to start and grow businesses in the U.S. A few limited options include:

O-1 status: An O-1 visa is reserved for individuals with extraordinary ability in the sciences, arts, education, business, or athletics, demonstrated by sustained national or international acclaim. The individual must be coming temporarily to the U.S. to continue work in the area of extraordinary ability. There must be an employer sponsor and a legitimate employer-employee relationship between the sponsor and the foreign national. Additionally, the foreign national must meet three (3) of 10 criteria to qualify, such as original business-related contributions of major significance, a high salary or other remuneration for services, employment in a critical capacity for organizations and establishments that have a distinguished reputation, or authorship of scholarly articles. While many foreign entrepreneurs may be on their way to extraordinariness, this visa class requires them to have already achieved a high level of success and a formal employer-employee relationship that is contradictory to the very nature of an entrepreneurship.

E-2 Treaty Investor: This temporary visa allows a national of a treaty country (a country with which the U.S. maintains a treaty of commerce and navigation) to be admitted to the U.S. when investing a substantial amount of capital in a U.S. business. Certain employees of the investor may also be eligible for this classification. The investor must have invested, or be actively involved in the process of investing, a substantial amount of capital in a bona fide enterprise in the U.S. and must be seeking to enter the U.S. solely to develop and direct the enterprise. The drawback of this category is that the U.S. does not have a treaty of commerce and navigation with all countries, so nationals of many countries are simply ineligible (most notably Brazil, China, and India).

EB-5 Immigrant Investor Program: Under this program, entrepreneurs (and their spouses and unmarried children under 21) are eligible to apply for a green card (permanent residence) if they make the necessary investment in a commercial enterprise in the U.S. and plan to create or preserve 10 permanent full-time jobs for qualified U.S. workers. In general, the minimum qualifying investment is $1 million, but if investing in a high unemployment or rural area, the qualifying investment is $500,000. Many start-ups do not require an initial investment at this level and/or cannot immediately support employment of 10 U.S. workers.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.